* Brazil stocks post biggest gain in 7 years after Lula
detained
* Emerging markets have biggest weekly gain since 2011
* S&P posts third straight weekly gain
* Oil prices on pace for 10 percent increase this week
* Dollar falls on wage decline in U.S. payrolls
(Updates prices, data)
By Dion Rabouin
NEW YORK, March 4 (Reuters) - A gauge of stock markets
worldwide rose to a two-month high on Friday, posting its
largest weekly gain since October, as oil and other commodity
prices firmed and strong U.S. jobs growth bolstered confidence
in the global economy.
The recovery in commodities lifted emerging markets shares,
which rose 1.6 percent on the day. MSCI's emerging-market stock
metric .MSCIEF posted its largest one-week gain since December
2011.
U.S. equity indexes rose to their highest levels since early
January following the jobs data, which showed strong growth in
payrolls and an increase in labor-force participation, though
there was a surprising decline in hourly wages.
Nonfarm payrolls grew by 242,000 jobs last month, beating
forecasts for 190,000 new jobs, but average hourly wages dipped
by 0.1 percent after a strong 0.5 percent increase in January.
The drop in wages suggested that U.S. inflation remained
muted, analysts said. Policymakers at the Federal Reserve are
watching inflation closely in their assessment of when to
continue raising interest rates.
"The wage number might be the silver lining, if you will,
against a more hawkish Fed over the next few months because the
Fed has been really focused on inflation," said Mohannad Aama,
managing director of Beam Capital Management LLC in New York.
A rise in the Fed's rates generally strengthens the dollar,
which makes U.S. exports more expensive and can reduce profits
for companies that do business overseas.
The Dow Jones industrial average on Friday .DJI rose 62.87
points, or 0.37 percent, to 17,006.77, the S&P 500 .SPX gained
6.59 points, or 0.33 percent, to 1,999.99 and the Nasdaq
Composite .IXIC added 9.60 points, or 0.2 percent, to
4,717.02.
The S&P 500 rose more than 2.5 percent for the week, its
third straight week of gains.
Brazil's stock market rose to a seven-month high after
police detained former President Luiz Inacio Lula da Silva for
questioning in an investigation of a bribery and money
laundering scheme.
The Bovespa .BVSP was up more than 4 percent following a 5
percent gain on Thursday after news of Lula's questioning
brought the investigation closer to President Dilma Rousseff,
who is fighting off impeachment. It was the largest two-day gain
the index has posted since January 2009.
For months, Brazilian assets have rallied when it appears
that prospects have increased of a change in government.
Rousseff's increased state intervention in the economy has long
been unpopular with business.
Yields of U.S. benchmark Treasuries rose to their highest
levels in a month, led by longer-dated securities. The benchmark
10-year Treasury note US10YT=RR fell 13/32 in price to yield
1.88 percent.
MSCI's global gauge of stocks .MIWD00000PUS was up 0.7
percent. Asian shares closed with their best week in five months
and European stock markets ended with a third week of gains.
Oil prices touched two-month highs, gaining 10 percent this
week. Benchmark Brent crude futures LCOc1 rose 4.6 percent to
$38.78, and U.S. crude CLc1 rose 4.2 percent to $36.03.
Iron ore .IO62-CNI=SI and copper CMCU3 both hit
four-month highs.
The dollar fell 0.25 percent against a basket of major
currencies .DXY , and the euro rose above $1.10 for the first
time since Feb. 26 EUR= .